The purpose of the proposed study is to improve depression outcome for individuals with major depressive disorder and co-morbid insomnia by combining state-of-the-art antidepressant algorithm (MED) and empirically supported cognitive-behavioral therapy for insomnia (CBTI). Insomnia is an important aspect of depression and is only incompletely addressed by existing treatments. As persistent insomnia is both a risk factor for depressive relapse and a more general indicator of disease severity and poor prognosis, identification of more effective therapies for depressed patients with insomnia has public health significance. Therefore, we propose a prospective, randomized controlled study that will test the efficacy of the proposed strategy in individuals with major depressive disorder and comorbid insomnia. The primary aim is to test whether the proposed intervention increases rates of remission from depression following 16 weeks of treatment compared with a control intervention. A secondary aim is to test whether the proposed intervention enhances longer-term outcome by reducing the proportion of participants who relapse during a 6-months follow-up phase, relative to the control treatment. Participants will be 300 men and women, drawn from 3 study sites, so that the sample is diverse with respect to race and ethnicity. Participants will meet DSM-IV criteria for Major Depressive Disorder, score 18 or higher on the 17-item Hamilton Depression Rating Scale (HRSD) and have difficulty initiating or maintaining sleep that is clinically significant (DSM-IV criteria for insomnia). After the end of the acute treatment phase, participants will be transitioned to community care and will be followed-up for 6 months. The primary outcome measures are the HRSD and the depression portion of the SCID-IV, to be administered by masked raters at baseline, biweekly during the acute phase, and monthly during the follow-up phase. Secondary measures include measures of sleep and functional outcome. Relevance: Achieving and maintaining remission is the desired clinical goal for MDD. By evaluating the efficacy of a treatment strategy that combines a standardized antidepressant pharmacotherapy with a non- pharmacological therapy that targets insomnia (CBTI), the proposed study, could lead to clinically meaningful improvement in the lives of many patients with MDD and insomnia. Insomnia is a common problem in patients with major depression, and is associated with poor response to depression treatment, recurrence of depression, and increased risk for suicide. This study will examine whether a specific psychological-behavioral treatment for insomnia, in conjunction with state-of-the-art antidepressant medication treatment, improves the outcomes of patients with major depression and insomnia. The results of this study may offer a method for improving the treatment of major depression without the use of additional medication.